I’ve been talking with many of my US clients about the recent tariffs on steel, aluminum, and lumber—and I know there’s a lot of anxiety out there. Let’s break down exactly what this means, why it matters to your construction business today, and most importantly, how you can proactively respond.
1. Your Costs are Going Up—Now
Let’s face it, the immediate impact of these tariffs is straightforward: your essential materials—steel, aluminum, and lumber—are becoming more expensive overnight.
Why It Matters to You:
- Your profits could shrink unless you’re proactive.
- Ongoing projects might suddenly break budgets.
- Some planned projects could become financially unworkable.
Action Steps:
- Talk to Your Suppliers: Get clarity right away on pricing trends. Don’t wait.
- Adjust Contracts ASAP: Consider cost escalation clauses in future contracts to protect your margins.
- Buy Smart and Buy Early: If you have projects in the pipeline, secure your materials now, before costs rise further.
2. Your Local Suppliers Will See a Surge—But Be Careful
As imports get pricier, you’ll likely turn to local suppliers. But guess what? Everyone else will too.
Why It Matters to You:
- Local supplies could dry up quickly, creating shortages.
- Prices from local suppliers will climb if demand spikes faster than supply.
Action Steps:
- Diversify Your Suppliers: Don’t rely on just one or two sources. Spread your risk.
- Build Relationships: Strengthen your connections with multiple suppliers now—not after everyone else rushes in.
- Manage Your Inventory Smartly: Keep a careful eye on inventory levels—avoid panic buying, but secure key supplies.
3. Alternative Materials Are Your New Best Friend
This moment is an opportunity. You can stand still and absorb higher costs, or you can pivot and explore new materials that aren’t impacted by tariffs.
Why It Matters to You:
- Using alternative materials can give you a competitive advantage—helping you deliver at a better price point.
- It positions you as an innovator in the market, potentially attracting new clients.
Action Steps:
- Test Alternatives Now: Don’t wait until it’s urgent. Start experimenting and training your teams immediately.
- Educate Your Clients: Help clients understand the value and safety of alternative materials.
- Partner Up: Collaborate closely with suppliers who can source these alternative products effectively.
4. Expect More Red Tape—and Plan For It
Tariffs bring paperwork, compliance, and regulations. It’s a hassle, but ignoring it could cost you dearly.
Why It Matters to You:
- Non-compliance risks costly penalties.
- Customs delays mean project delays, which can hurt your reputation and cash flow.
Action Steps:
- Educate Your Team: Make sure your people understand compliance. Bring in an expert if you need to.
- Get Ahead of Compliance Issues: Don’t just react—develop clear processes now.
- Consider Expert Help: Bringing in external legal or compliance experts now could save headaches later.
5. Financing and Investment May Get Tougher
Banks and investors get nervous in uncertain times. Be prepared for tighter credit and cautious investors.
Why It Matters to You:
- Projects requiring financing could stall.
- Lenders may become more hesitant or impose stricter terms.
Action Steps:
- Communicate with Your Lenders: Proactively reassure them of your risk management and planning efforts.
- Maintain Strong Cash Reserves: Now’s the time to tighten financial management and hold extra liquidity.
- Develop Flexible Scenarios: Create multiple financial scenarios to demonstrate you’re prepared, whatever comes next.
6. International Pushback May Cause Extra Headaches
If you do business internationally—or if you rely on imported equipment—other countries’ retaliations can affect you directly.
Why It Matters to You:
- International opportunities may shrink due to retaliatory measures.
- Imported equipment and machinery could suddenly become expensive or scarce.
Action Steps:
- Secure Key Equipment Early: If critical equipment is imported, lock in prices and deliveries right away.
- Think Domestic First: Identify and build relationships with domestic suppliers who offer alternatives.
- Diversify Your Market: Consider exploring new markets less impacted by trade conflicts.
Here’s the Bottom Line—You Need to Act Now
The businesses that get ahead during uncertain times are the ones that act early and decisively. The tariffs are here. Costs are rising. The question is: Will you wait and see—or will you lead?
My strongest advice to every client right now is clear:
- Get proactive. Start conversations immediately with suppliers, banks, and your internal teams.
- Adapt quickly. Embrace alternatives, innovation, and strategic partnerships.
- Stay informed. Regularly reassess your plans based on new information and adjust quickly.
This isn’t just about surviving—it’s about positioning your construction business to thrive even in tough market conditions. Let’s stay ahead, together.
Dr. Sandra Palmer
CEO & Senior Partner
Sandra@AboveorbeyondJm.com
